Expand Energy (EXE) Q2 2024 earnings summary

Executive summary

• Achieved significant operational efficiencies, including a 50% improvement in Marcellus drilling performance since 2022 and a 20% decrease in drilling costs over two years, while focusing on natural gas production in Marcellus and Haynesville post-Eagle Ford divestitures.

• 2Q24 adjusted EBITDAX was $358–$360 million, with cash and cash equivalents at $1.0–$1.02 billion as of June 30, 2024.

• Net loss of $227 million ($1.73 per share) for Q2 2024, with adjusted net income of $1 million ($0.01 per share).

• Lowered full-year capital and production expense guidance by $50 million and approximately 8%, respectively, due to operational improvements and cost deflation.

• Pending all-stock merger with Southwestern Energy, targeted to close in H2 2024, approved by both companies' shareholders, with confidence in delivering planned synergies.

Financial highlights

• Q2 2024 revenues were $505 million, down from $1.89 billion in Q2 2023, driven by lower commodity prices and reduced volumes post-Eagle Ford divestitures.

• 2Q24 production averaged 2.75 bcfe/d, 100% natural gas, with Marcellus and Haynesville units producing 1,554 mmcf/d and 1,191 mmcf/d, respectively.

• Adjusted EBITDAX for Q2 2024 was $358–$360 million; free cash flow was negative $93 million; adjusted free cash flow was negative $119 million.

• Cash and cash equivalents were $1.0–$1.02 billion at quarter-end, with $2.5 billion in unused borrowing capacity.

• $3.5 billion returned to shareholders since 2021 through dividends and buybacks.

Outlook and guidance

• FY24 capital guidance lowered to $1.2–$1.3 billion; production expense guidance reduced to $0.21–$0.26/mcf.

• 2024 total natural gas production expected at 2,650–2,750 mmcf/d, with plans to drill 95–115 gross wells.

• Southwestern merger expected to close in H2 2024, pending regulatory approvals, with ongoing integration planning.

• Liquidity of $3.5 billion expected to be sufficient for near- and long-term obligations.

• Base quarterly dividend of $0.575 per share declared for Q3 2024.